Posts

The MalwareTech Poker Hand: Calling DOJ’s Bluff

/3 Comments/in /by

With a full poker hand’s worth of filings on Friday, MalwareTech’s (AKA Marcus Hutchins) lawyers are finally revealing the main thrust of their defense. The five filings are:

  1. A motion for a bill of particulars, basically demanding that the government reveal what 10 computers Hutchins and his alleged co-conspirator conspired and intended to damage
  2. A motion to suppress the statements Hutchins made after he was arrested, requesting an evidentiary hearing, based on the fact that Hutchins was high and exhausted and didn’t know US law about Miranda warnings
  3. A motion to dismiss the indictment, arguing on three different grounds that,
    • The CFAA charges (one and six) don’t allege any intent to cause damage to a protected computer (because the malware in question steals data, but doesn’t damage affected computers)
    • The Wiretapping charges (two through five) don’t allege the use of a device as defined under the Wiretap Act, but instead show use of software
    • The sales-related charges (one, five, and six) conflate the sale of malware with the ultimate effect of it
  4. A motion to dismiss the indictment for improper extraterritorial application and venue, effectively because this case should never have been charged in the US, much less Milwaukee
  5. A motion to dismiss charges two and six based on suspected improper grand jury instruction failing to require intentionality

Effectively, these five motions (which are likely to meet with mixed success, but even where they’re likely to fail, will lay the groundwork for trial) work together to sustain an argument that Hutchins should never have been charged with these crimes in the US, and that FBI may have cheated a bit to get the incriminatory statements that might let them sustain the prosecution.

I laid out the general oddity of these charges here, and the background to the Miranda challenge and grand jury instructions here, here, and here.

Hutchins was high and tired, not drunk, for his one minute Miranda warning

While I don’t expect the Miranda challenge (item 2) to be effective on its face, I do expect it to serve as groundwork for a significant attempt to discredit Hutchin’s incriminatory statements at trial. This motion provides more detail about why his defense thinks it will be an effective tactic. It’s not just that Hutchins is a foreigner and couldn’t be expected to know how US Miranda works, or that the FBI only documented that they asked Hutchins if he had drinking alcohol four months after the arrest (as I laid out here). But as the motion notes, the FBI doesn’t claim to have asked whether he was exhausted or otherwise intoxicated.

According to an FBI memorandum, before “initiating a post arrest interview,” an agent asked Mr. Hutchins if he had been drinking that day, and he responded that he had not. That memorandum, written over four months after the arrest, then states that the agent asked Mr. Hutchins “if has [sic] in a good state of mind to speak to the FBI Hutchins agreed.” Mr. Hutchins did not understand it to be an inquiry as to whether he had used drugs or was exhausted.

The initial 302 of the interrogation records Hutchins telling the agents that he had been partying and not sleeping.

Mr. Hutchins discussed his partying while in Las Vegas, as well as his lack of sleep, during the interrogation.

The motion admits that he had been using drugs (of unspecified type) the night before.

As Mr. Hutchins sat in the airport lounge, he was not drinking, but he was exhausted from partying all week and staying up the night before until the wee hours. He had also used drugs.

Nevada legalized the recreational use of marijuana effective July 2017, so if he was still high during this interview, he might have been legally intoxicated under state (but not federal) law. And there’s not a lick of evidence that the FBI asked him about that.

After laying out that the FBI has no record of asking Hutchins whether he was sober (rather than just not drunk), the motion reveals that the FBI couldn’t decide at what time it gave Hutchins his Miranda warning.

An FBI Advice of Rights form sets forth Miranda warnings and reflects Mr. Hutchins’ signature. It is dated August 2, 2017, but the time it was completed includes two crossed out times, 11:08 a.m. and 2:08 p.m., and one uncrossed out time, 1:18 p.m. (which is one minute after the FBI log reflects Mr. Hutchins’ arrest, as noted above).

And as noted before, and reiterated here, the FBI didn’t record that part of his interview.

The motion notes that if the final, current record of the time of warning is correct, then the Miranda warning, including any discussion of how US law differs from British law, took place in the minute after he was whisked away from this gate.

Hutchins recently tweeted that he “slept the entire time I was in prison,” which while not accurate (he was neither in prison nor in real solitary), would otherwise corroborate the claim he was exhausted.

The government’s cobbled case on intentionality and computer law

Items 3 and 5, arguing the law is inappropriately applied and specifically not instructed correctly with regards to two charges, work together to argue that the government has cobbled together charges against Hutchins via misapplying both CFAA and Wiretap law, and in turn using conspiracy charges and misstating requisite intentionality to be able to get at Hutchins.

As I’ve noted, Hutchins’ lawyers have been arguing for some time that the government may not have properly instructed the grand jury on the intentionality required under charges 2 and 6. At a hearing in February, Magistrate Nancy Joseph showed some sympathy to this argument (though is still reviewing whether the defense should get the grand jury instructions). As I noted in that post, whereas the government once claimed it would easily fix this problem by getting a superseding indictment (possibly larding on new charges), they seem to have lost their enthusiasm for doing so.

It’s the combination of the rest of the legal challenge that I find more interesting. The challenge will interact with recent innovations in charging other foreign hackers, especially a bunch of Russians that will make DOJ especially defensive of this challenge. But the motions all cite Seventh Circuit precedent closely, so I’m not sure whether that matters.

Ultimately, this motion makes roughly the same arguments that Orin Kerr made as soon as the indictment came out. As he introduced his more thorough explanation in August,

This raises an interesting legal question: Is it a crime to create and sell malware?

The indictment asserts that Hutchins created the malware and an unnamed co-conspirator took the lead in selling it. The indictment charges a slew of different crimes for that: (1) conspiracy to violate the Computer Fraud and Abuse Act; (2) three counts of violating 18 U.S.C. 2512, which prohibits selling and advertising wiretapping devices; (3) a count of wiretapping; and (4) a count of violating the Computer Fraud and Abuse Act through accomplice liability — basically, aiding and abetting a hacking crime.

Do the charges hold up? Just based on a first look at the case, my sense is that the government’s theory of the case is fairly aggressive. It will lead to some significant legal challenges. It’s hard to say, at this point, how those challenges will play out. The indictment is pretty bare-bones, and we don’t have all the facts or even what the government thinks are the facts. So while we can’t say that this indictment is clearly an overreach, we can say that the government is pushing the envelope in some ways and may or may not have the facts it needs to make its case. As always, we’ll have to stay tuned.

Kerr is not flaming hippie, so I assume that these arguments will be rather serious challenges for the government and I await the analysis of this challenge by more Fourth Amendment lawyers. But as he suggested back in August, Hutchins’ team may well be right that this indictment is an overreach.

DOJ still hasn’t explained why it charged Hutchins for a crime with no known US victims

While requests for Bill of Particulars (basically, a request for more details about what the government is claiming broke the law) are usually unsuccessful, this one does two interesting things. It asks the government for proof of damage, including proof of which ten computers got damaged.

Mr. Hutchins asks that the government be required to particularize the “damage” it intends to offer into evidence at trial in connection with the alleged violations of the Computer Fraud and Abuse Act by the two defendants. Mr. Hutchins also asks that the government be required to particularize the “10 or more protected computers” to which it contends the defendants conspired and attempted to cause “damage.”

Whether the motion itself is successful or not, demanding proof that ten computers were damaged helps support the challenge to the two CFAA charges based on whether stealing credentials amounts to damage. It also lays the groundwork for the motion made explicitly in item 4 — that Hutchins should never have been charged in the US, much less Wisconsin.

As I laid out in this piece, it appears likely that charges against Hutchins arose out of back door searches done as part of the investigation into who “MalwareTech” was after he sinkholed WannaCry. For whatever reason (probably because the government thought Hutchins could inform on someone, possibly related to either WannaCry itself or Kelihos), the government decided to cobble together a case against Hutchins consisting — by all appearances — entirely of incidental collection so as to coerce him into a plea deal. When he got a team of very good lawyers and then bail, that put a lot more pressure on the appropriateness of the charges in the first place.

So now, eight months after Hutchins was arrested, we’re finally getting to that question of why the US government decided to charge him for a crime that even DOJ didn’t claim had significant US victims.

The motion starts by noting that Hutchins didn’t do most of the acts alleged, his co-defendant Tran (whom the government has shown little urgency in extraditing) did. But even for Tran’s acts (basically marketing and selling the malware), there’s no affirmative tie made to Wisconsin.

As part of the purported conspiracy, the indictment alleges that Mr. Hutchins created the Kronos software, described as “a particular type of malware that recorded and exfiltrated user credentials and personal identifying information from protected computers.” (Id. ¶¶ 3(e), 4(a).) It also alleges that Mr. Hutchins and his co-defendant later updated Kronos. (Id. ¶ 4(d).)

All other alleged overt acts in furtherance of the purported conspiracy pertain solely to Mr. Hutchins’ co-defendant. Per the indictment, the codefendant (1) used a video posted to YouTube to demonstrate how Kronos worked, (2) advertised Kronos on internet forums, (3) sold a version of Kronos, and (4) offered crypting services for Kronos. (Id. ¶¶ 4(b), (c), (e), (f), (g).)

Aside from a bare allegation that each offense was committed “in the state and Eastern District of Wisconsin and elsewhere,” the indictment does not describe any connection to this District.

While the government has long suggested that the case is in EDWI because an FBI agent located there bought a copy of Kronos, the motion suggests Hutchins’ team hasn’t even seen good evidence of that yet.

Here, the indictment reflects that Mr. Hutchins was on foreign soil, and any acts he performed occurred there. There is no indication that damage was caused in the Eastern District of Wisconsin—or, indeed, that any damage occurred at all. At best, a buyer was present in this District. But the buyer would then need to use Kronos to cause damage in the District for venue to lie. Nothing [i]n the indictment supports that conclusion.

The charging of two foreigners is all the more problematic on the four wiretapping charges, given that (unlike CFAA), Congress did not mean to apply it to foreigners.

There is evidence that Congress intended the CFAA—the legal basis of Counts One and Six—to have extraterritorial application. The CFAA prohibits certain conduct with respect to “protected computers,” 18 U.S.C. § 1030(e)(2)(B), and the legislative history shows that Congress crafted the definition of that term with foreign-based attackers in mind. S. Rep. 104-357, at 4-5 (1996).

The Wiretap Act—at issue in Counts Two through Five—is different, though. That law does not reflect a clear congressional mandate that it should apply extraterritorially. Accordingly, courts have repeatedly found that it “has no extraterritorial force.” Huff v. Spaw, 794 F.3d 543, 547 (6th Cir. 2015) (quoting United States v. Peterson, 812 F.2d 486, 492 (9th Cir. 1987)).

There is a great deal of precedent to establish venue based on where a federal agent bought something. Indeed, the main AlphaBay case against Alexandre Cazes consisted of that (remember that Kronos was ultimately sold on AlphaBay). But that case was based on the illegal sale of drugs and ATM skimmers, not software, which given the challenge to the CFAA and Wiretapping application here, might make the EDWI purchase of Kronos insufficient to justify venue here.

I’m not sure whether this motion will succeed or not. But one way or another, given that the defense appears to have seen no real basis for venue here, this motion may serve as critical groundwork for what appears to be a justifiable argument that this case should never have been charged in the US.

I keep waiting for DOJ to give up this case in the face of having to argue that the guy who sinkholed WannaCry should be prosecuted because he refused to accept a plea deal on charges with no known US victims. But they’re probably too stubborn to do that.

Update: Corrected Joseph’s name. h/t GM.

FBI Decided Four Months after They Arrested MalwareTech that He Told Them He Hadn’t Been Drinking before the Arrest

/8 Comments/in /by

Marcus Hutchins’ (AKA MalwareTech) defense team has replied to the government’s response to their motion to compel discovery; they are seeking evidence pertaining to his arrest and about the people (his co-defendant, Tran, and an informant, “Randy”) on whom Hutchins was incidentally collected. Here’s my post on the original defense motion, and the one on the government response showing that this case is all about incidental collection.

FBI’s discussions about what to do about a drunken MalwareTech

As I laid out, the defense claims that Hutchins was intoxicated and exhausted when he was arrested awaiting a transatlantic flight after a week of partying at hacker conferences in Las Vegas. The government claims they asked Hutchins if he had been drinking, and (they claim) he said no.

This latest filing shows that the FBI was concerned about just that. FBI Agents had an email discussion the day Hutchins was arrested discussing what they should do if he was drinking.

That production included one e-mail, dated August 2, 2017 (the day of Mr. Hutchins’ arrest), discussing what the agents should do if Mr. Hutchins started drinking at the airport (the plan: “pull him out of terminal”). This shows the agents’ contemporaneous awareness of, and concern about, the possibility of Mr. Hutchins being impaired. There surely might be other communications, including e-mails and text messages on agents’ phones, touching on the voluntariness of Mr. Hutchins’ supposed proper waiver of his Miranda rights, as well as the voluntariness of the resulting statement.

The government claims that the Agents asked Hutchins if he had been drinking as part of their interview (only part of which was recorded). Except they didn’t memorialize that contemporaneously. They wrote it up into a 302 “over four months after the arrest” — so sometime after December 2.

The government makes much of the fact that Mr. Hutchins was asked by FBI agents if he had been drinking. But even if the FBI 302 (which was written over four months after the arrest) is accurate, it does not mention exhaustion or other possible forms of intoxication (it only mentions drinking).

Consider how this looks, given another detail from the defense reply: that the FBI didn’t turn over that 302 (or the email showing the FBI was concerned that Hutchins might be drinking) until the day they submitted their response on January 19.

The government’s response neglects to mention that these records that the government references as being disclosed “recently” were produced to the defense earlier on the same day the response was filed.

Incorporating the details provided in this status report produces this timeline:

November 21: Defense and prosecution lawyers try to resolve these issues including questions about whether Hutchins was intoxicated, and conclude they weren’t going to be able to resolve them.

[C]ounsel for the government and counsel for Mr. Hutchins participated in a conference call in an attempt to resolve open issues related those discovery requests. Despite our best efforts, we have been unable to resolve those issues.

After December 2: FBI creates 302 memorializing claim that they asked Hutchins whether he had been drinking.

December 7: Hutchins’ lawyers tell the government they’re going to file a motion compelling this discovery.

[C]ounsel for Mr. Hutchins informed the government they intend to file a motion for an order that compels the government to produce certain materials to the defense.

January 5: Defense files motion to compel.

January 19: Government turns over 302 claiming they asked if Hutchins had been drinking when they arrested him and response to motion to compel.

In spite of the fact that FBI itself was worried on the day they arrested him about whether Hutchins would be sober enough for an interrogation, they never got around to claiming that they had made sure he was until after some time, potentially months, of discussions about that question and after they had decided they couldn’t get the defense to stop asking for it.

I’d say that’s pretty sketchy.

Government didn’t get around to surveilling Hutchins until July 26

In my post on the government response, I wondered why there would be a surveillance report from July 26, but not one from when Hutchins first arrived in Las Vegas on July 21.

The filing also reveals that there are,

two reports detailing limited surveillance of the defendant on July 26, 2017, and August 2, 2017.

Note, while August 2 is the day Hutchins left Las Vegas, the 26th was not the day he arrived; that was July 21. So they conducted surveillance of him on at least one day while he was in the US hanging out with other hackers at Black Hat, but won’t tell him if they conducted surveillance on the other days.

The defense reply explains it: for whatever reason, Agents in Wisconsin didn’t get around to asking Las Vegas FBI to start surveillance on Hutchins until July 26.

Since the agents started surveillance on July 26, 2017 and it ran through August 2, 2017, it is inconceivable that the agents actively surveilling him exchanged nothing but a single e-mail right before Mr. Hutchins’ arrest.1

1 The only other e-mail disclosed by the government appears to have been sent from an FBI agent in Milwaukee on July 26, 2017, and requests FBI Las Vegas assistance to conduct surveillance of Mr. Hutchins.

For some reason, the FBI either didn’t realize the guy they had just indicted on July 11 was coming to the US until well after he got here in spite of the fact that 1) he had been to Black Hat the year before 2) he was talking about coming again on Twitter 3) he tracked his flight into the country on Twitter, or they didn’t decide they were going to arrest him until after he had been here for a while.

So arresting Hutchins was so urgent they had to do it before he left the country (to avoid extradition), even if he had been drinking (and interviewing him while he was still confused and without counsel was such a priority they couldn’t let him just catch up on his sleep in jail).

But not so urgent they had prepared enough for his well-advertised arrival in the weeks before he arrived to have Las Vegas’ FBI ready to surveil him.

The Government’s MalwareTech Case Goes (Further) To Shit

/16 Comments/in , /by

MalwareTech’s lawyers just submitted a motion to compel discovery in his case. It makes it clear his case is going to shit — and that’s only the stuff that is public.

DOJ is hiding what drunken MalwareTech understood about un-common law

First, the motion reveals that even though the FBI recorded its interview with Marcus Hutchins at the Las Vegas airport, where Hutchins allegedly admitted to creating the Kronos malware (though in actuality Hutchins only admitted to creating that code), they somehow forgot to record (or even write down) the Miranda warning part.

After Mr. Hutchins was taken into custody, two law enforcement agents interviewed him at the airport. The memorandum of that interview generically states: “After being advised of the identity of the interviewing Agents, the nature of the interview and being advised of his rights, HUTCHINS provided the following information . . .” A lengthy portion of Mr. Hutchins’ interview with the agents was audio recorded. Importantly, however, the agents did not record the part of the interview in which they purportedly advised of him of his Miranda rights, answered any questions he might have had, and had him sign a Miranda waiver form.

This is important for several reasons. First, Hutchins is a foreign kid. And while I presume he has seen Miranda warnings a jillion times on the TV, those warnings are different in the US than they are in the UK, contrary to whatever else we might share as common law.

Mr. Hutchins is a citizen of the United Kingdom, where a defendant’s post-arrest rights are very different than in the United States.4 The United Kingdom’s version of Miranda contains no mention of the right to counsel, and if a defendant does not talk, it may later be used against him under certain circumstances.5 Because of this, any government communications in advance of Mr. Hutchins’ arrest and regarding how to advise him of his rights under Miranda are important to demonstrate that Mr. Hutchins would not have understood any purported Miranda warnings and that he was coerced to waive his rights.

4 United Kingdom law requires the following caution being given upon arrest (though minor wording deviations are allowed): “You do not have to say anything. But it may harm your defence if you do not mention when questioned something which you later rely on in Court. Anything you do say may be given in evidence.”

So the specific wording of the warning he got would be especially important to understand whether he was told how things are different here in the former colonies, where you’re always told you can have a lawyer.

Also Hutchins was drunk and — because he’d been at DefCon and Black Hat all week — exhausted. But the defense can’t show that because the government isn’t turning over any of the surveillance materials from the week the FBI was surely following Hutchins in Las Vegas.

The defense believes the requested discovery will show the government was aware of Mr. Hutchins’ activities while he was in Las Vegas, including the fact that he had been up very late the night before his arrest, and the high likelihood that the government knew he was exhausted and intoxicated at the time of his arrest.

The government doesn’t want you to know co-defendant Tran is just a convenient excuse to arrest MalwareTech

Next, the government is withholding both information about Hutchins’ co-defendant, and the MLAT request the government used to get that information. The co-defendant’s last name is Tran, but the government has been hiding that since it accidentally published the name when Hutchins’ docket went live. Tran has not yet been arrested, but apparently there was evidence relating to him in a country that would respond to an American MLAT request. The government hasn’t turned it over.

[T]he government may be withholding information that could exculpate Mr. Hutchins. For example, any material showing that the codefendant operated independently of Mr. Hutchins’ alleged conduct would tend to demonstrate that they did not conspire to commit computer fraud and abuse (Count 1). The indictment itself supports that notion: it alleges that the codefendant advertised and sold the Kronos malware independently of Mr. Hutchins. (Indictment at 3 ¶ 4(e)-(f).) Moreover, the indictment alleges that the malware was advertised on the AlphaBay market forum, which the Department of Justice seized and shut down on July 20, 2017 in cooperation with a number of foreign authorities.8 In connection with that case, the government likely has records of the co-defendant’s activities on AlphaBay that it has not produced (e.g., records obtained through MLAT requests).

They also haven’t turned over the MLAT application itself, which would explain why some country has turned over evidence on Tran, but not Tran himself.

To date, the government has produced materials responsive to a single MLAT request, and has declined to produce the MLAT request itself. The MLAT request, however, surely contains information regarding the government’s theory of the case and may have been signed by an agent who will testify at trial. MLAT requests vary from country to country, but they can be quite similar to search warrants, since they are often used to obtain documents.

DOJ won’t tell you which ham sandwiches the grand jury intended knowed to indict

Hutchins’ lawyers then ask for the grand jury instructions because the indictment as charged doesn’t get the mens rea necessary for the underlying charges. Basically, two of the charges against Hutchins were laid out as if the only thing needed for a crime was to knowingly do something, as opposed to intentionaly do it.

The defense needs the legal instructions for an anticipated motion to dismiss the indictment. One ground for that motion is that at least two of the charged counts are defective on their face, failing to include the appropriate mens rea. Since the two counts deviate materially from the required and heightened mental states set forth in the operative statutes, this demonstrates likely irregularities in how the grand jury was instructed on the law.

[snip]

Count 6 suffers from a similar defect. It charges that the defendants:

[K]nowingly caused the transmission of a program, information and command and as a result of such conduct, attempted to cause damage without authorization, to 10 or more protected computers during a 1-year period. In violation of Title 18, United States Code, Sections 1030(a)(5)(A), (c)(4)(B)(i) and (ii), (c)(4)A(i)(VI), 1030(b), and 2.

(Indictment at 8 (emphasis added).)

But 1030(a)(5)(A) states it is illegal to:

[K]nowingly cause[] the transmission of a program, information and command, and as a result of such conduct, intentionally cause[] damage without authorization, to a protected computer[.] (Emphasis added.)

Likewise, the Seventh Circuit Pattern Jury Instructions state the elements of the offense are:

1. The defendant knowingly caused the transmission of a [program; information; code; command]; and

2. By doing so, the defendant intentionally caused damage to a protected computer without authorization. (Emphasis added.)

The plain text of 1030(a)(5)(A) and the Pattern Jury Instructions leave no doubt that Count 6, as it is pleaded, does not include the requisite “intentional” mens rea for causing damage without authorization, again failing to allege an essential element of the offense.

Effectively, they’re arguing that the government has charged Hutchins for knowingly done something when they had to charge him for intentionally doing something. Which, given that his code was probably used without his knowledge, is going to present difficulties. And so Hutschins’ team is going to attack the indictment itself.

Considering that Counts 2 and 6 misstate the required mental states specified in the statutes, there is a high likelihood the government did not properly instruct the grand jury on the law, and the grand jury returned a legally defective indictment, as a result of improper legal instructions.

What about “Randy”?

But the thing that intrigues me the most about this case is that some guy the government is naming “Randy” — because they don’t want to actually reveal anything about this dude — is a key witness against Hutchins. 

The defense expects “Randy” to testify at trial because he is alleged to have had extensive online chats with Mr. Hutchins around the time of the purported crimes in which Mr. Hutchins discussed his purported criminal activity. Any communications and materials relating to “Randy” are therefore material to defense preparations.

The defense argues that the government is treating Randy like a tipster rather than a witness as a way to hide who he is. This is worth citing at length (also note Marcia Hofmann and Brian Klein added local lawyer Daniel Stiller, who — I presume — is Seventh Circuit citing with great abandon).

The informant privilege does not permit the government to conceal a witness when, as here, disclosure “is relevant and helpful” to a defendant’s defense “or is essential to a fair determination of a cause.” United States v. McDowell, 687 F.3d 904, 911 (7th Cir. 2012) (quoting Roviaro v. United States, 353 U.S. 53, 60-61 (1957)). Indeed, the Seventh Circuit’s treatment of the privilege indicates that its reach is typically limited to background sources of information, as in a tipster who furnishes details that commence an investigation resulting in a prosecution premised on the fruits of the investigation, not the details of the background tip.

A mere tipster, according to the Seventh Circuit, is “someone whose only role was to provide the police with the relevant information that served as the foundation to obtaining a search warrant.” Id. Tipsters differ from what the Seventh Circuit terms “transactional witnesses,” who are individuals “who participated in the crime charged . . . or witnessed the event in question.” Id. For tipsters, “the rationale for the privilege is strong and the case for overriding it is generally weak.” Id. In contrast, “the case for overriding the privilege and requiring disclosure tends to be stronger” for transactional witnesses. Id.

Here, the government’s refusal to disclose even the identity of “Randy’s” attorney is apparently the result of miscategorizing an important witness as a mere tipster. “Randy” is a cooperating witness, one whose provision of information to law enforcement was facilitated by consideration—proffer immunity, at the least—from the government. This circumstance alone weighs against continuing confidentiality because “Randy” surely knows his cooperation will be revealed.

The government won’t even give the defense the name of this dude’s lawyer so the lawyer can tell them his client doesn’t want to talk to them.

Me? I’m guessing if the government were required to put “Randy” on the stand they’d contemplate dismissing the charges against Hutchins immediately. I’m guessing the government now realizes “Randy” took them for a ride — perhaps an enormous one. And given how easy it is to reconstitute chat logs — but here, it’s not even clear “Randy” has the chat logs, but just claimed to have been a part of them, in an effort to incriminate him — I’m guessing this part of the case against Hutchins won’t hold up.

It’d probably be a good time for the government to dismiss the charges against Hutchins and give him an H1B for his troubles so he can surf off the last 6 months of stress. But that’s not how the government works, when they realize they really stepped in a load of poo.

The Bankrupt Attribution of WannaCry

/22 Comments/in /by

I’ve been puzzling through this briefing, purportedly attributing the WannaCry hack to North Korea, which followed last night’s Axis of CyberEvil op-ed (here’s the text). The presser was … perhaps even more puzzling than the Axis of CyberEvil op-ed.

Unlike the op-ed, Homeland Security Czar Tom Bossert provided hints about how the government came to attribute this attack.

Bossert makes much of the fact that the Five Eyes plus Japan all agree on this.

We do so with evidence, and we do so with partners.

Other governments and private companies agree.  The United Kingdom, Australia, Canada, New Zealand, and Japan have seen our analysis, and they join us in denouncing North Korea for WannaCry.

He also points to the Microsoft and (unnamed — because it’d be downright awkward to name Kaspersky in the same briefing where you attack them as a cybersecurity target) security consultant attributions from months ago.

Commercial partners have also acted.  Microsoft traced the attack to cyber affiliates of the North Korean government, and others in the security community have contributed their analysis.

Here are the specific things he says about how the US, independent of Microsoft and villains like Kaspersky, made an attribution.

What we did was, rely on — and some of it I can’t share, unfortunately — technical links to previously identified North Korean cyber tools, tradecraft, operational infrastructure.  We had to examine a lot.  And we had to put it together in a way that allowed us to make a confident attribution.

[snip]

[I]t’s a little tradecraft, to get to your second question.  It’s hard to find that smoking gun, but what we’ve done here is combined a series of behaviors.  We’ve got analysts all over the world, but also deep and experienced analysts within our intelligence community that looked at not only the operational infrastructure, but also the tradecraft and the routine and the behaviors that we’ve seen demonstrated in past attacks.  And so you have to apply some gumshoe work here, not just some code analysis.

Nevertheless, Bossert alludes to people launching this attack from “keyboards all over the world,” but says because these “intermediaries … had carried out those types of attacks on behalf of the North Korean government in the past,” they were confident in the attribution.

People operating keyboards all over the world on behalf of a North Korean actor can be launching from places that are not in North Korea.  And so that’s one of the challenges behind cyber attribution.

[snip]

[T]here were actors on their behalf, intermediaries, carrying out this attack, and that they had carried out those types of attacks on behalf of the North Korean government in the past.  And that was one of the tradecraft routines that allowed us to reach that conclusion.

Taking credit for stuff the private sector did

In his prewritten statement, Bossert provides on explanation for the timing of all this. One of the reasons the US is attributing the WannaCry attack now — aside from the need to gin up war with North Korea — is that Facebook and Microsoft, “acting on their own initiative last week,” took action last week against North Korean targets.

We applaud our corporate partners, Microsoft and Facebook especially, for acting on their own initiative last week without any direction by the U.S. government or coordination to disrupt the activities of North Korean hackers.  Microsoft acted before the attack in ways that spared many U.S. targets.

Last week, Microsoft and Facebook and other major tech companies acted to disable a number of North Korean cyber exploits and disrupt their operations as the North Koreans were still infecting computers across the globe.  They shut down accounts the North Korean regime hackers used to launch attacks and patched systems.

Yet even while acknowledging that Microsoft and Facebook are busy keeping the US safe, he demands that the private sector … keep us safe.

We call today — I call today, and the President calls today, on the private sector to increase its accountability in the cyber realm by taking actions that deny North Korea and the bad actors the ability to launch reckless and disruptive cyber acts.

Golly how do you think the US avoided damage from the attack based on US tools so well?

Then Bossert invites Assistant Secretary for Cybersecurity and Communications at DHS Jeanette Manfra to explain not how the US attributed this attack (the ostensible point of this presser), but how the US magically avoided getting slammed — by an attack based on US tools — as badly as other countries did.

By midafternoon, I had all of the major Internet service providers either on the phone or on our watch floor sharing information with us about what they were seeing globally and in the United States.  We partnered with the Department of Health and Human Services to reach out to hospitals across the country to offer assistance.  We engaged with federal CIOs across our government to ensure that our systems were not vulnerable.  I asked for assistance from our partners in the IT and cybersecurity industry.  And by 9:00 p.m. that night, I had over 30 companies represented on calls, many of whom offered us analytical assistance throughout the weekend.

By working closely with these companies and the FBI throughout that night, we were able to issue a technical alert, publicly, that would assist defenders with defeating this malware.  We stayed on alert all weekend but were largely able to escape the impacts here in this country that other countries experienced.

Managing to avoid getting slammed by an attack that the US had far more warning of (because it would have recognized and had 96 days to prepare) is proof, Manfra argues, of our preparation to respond to attacks we didn’t write the exploit for.

[T]he WannaCry attack demonstrated our national capability to effectively operate and respond.

Ix-Nay on the AdowBrokers-Shay

Which brings us to the dramatic climax of this entire presser, where Tom Bossert plays dumb about the fact that his this attack exploited an NSA exploit. In his first attempt to deflect this question, Bossert tried to distinguish between vulnerabilities and the exploits NSA wrote for them.

Q    Had they not been able to take advantage of the vulnerabilities that got published in the Shadow Brokers website, do you think that would have made a significant difference in their ability to carry out the attack?

MR. BOSSERT:  Yeah.  So I think what Dave is alluding to here is that vulnerabilities exist in software.  They’re not — almost never designed on purpose.  Software producers are making a product, and they’re selling it for a purpose.

Pretending a vulnerability is the same thing as an exploit, Bossert pointed to the (more visible but still largely the same) Vulnerabilities Exploit Process Trump has instituted.

When we find vulnerabilities, the United States government, we generally identify them and tell the companies so they can patch them.

In this particular case, I’m fairly proud of that process, so I’d like to elaborate.  Under this President’s leadership and under the leadership of Rob Joyce, who’s serving as my deputy now and the cybersecurity coordinator, we have led the most transparent Vulnerabilities Equities Process in the world.

Hey, by the way, why isn’t Rob Joyce at this presser so the person in government best able to protect against cyber attacks can answer questions?

Oh, never mind–let’s continue with this VEP thing.

And what that means is the United States government finds vulnerabilities in software, routinely, and then, at a rate of almost 90 percent, reveals those.  They could be useful tools for us to then exploit for our own national security benefit.  But instead, what we choose to do is share those back with the companies so that they can patch and increase the collective defense of the country.  It’s not fair for us to keep those exploits while people sit vulnerable to those totalitarian regimes that are going to bring harm to them.

So, in this particular case, I’m proud of the VEP program.  And I’d go one step deeper for you:  Those vulnerabilities that we do keep, we keep for very specific purposes so that we can increase our national security.  And we use them for very specific purposes only tailored to our perceived threats.  I think that they’re used very carefully.  They need to be protected in such a way that we don’t leak them out and so that bad people can get them.  That has happened, unfortunately, in the past.

Hell! Let’s go for broke. Let’s turn the risk that someone can steal our toys and set off a global worm into the promise that we’ll warn people they’ve been hacked.

But one level even deeper.  When we do use those vulnerabilities to develop exploits for the purpose of national security for the classified work that we do, we sometimes find evidence of bad behavior.  Sometimes it allows us to attribute bad actions.  Other times it allows us to privately call — and we’re doing this on a regular basis, and we’re doing it better and in a more routine fashion as this administration advances — we’re able to call targets that aren’t subject to big rollouts.  We’re able to call companies, and we’re able to say to them, “We believe that you’ve been hacked.  You need to take immediate action.”  It works well; we need to get better at doing that.  And I think that allows us to save a lot of time and money.

We’re not yet broke yet, though! When Bossert again gets asked whether WannaCry was based off a US tool, he tried to argue the only tool involved was the final WannaCry one, not than the underlying NSA exploit.

Q    So you talked about the 90 percent of times when you guys share information back with companies rather than exploit those vulnerabilities.  Was this one of the 10 percent that you guys had held onto?

MR. BOSSERT:  So I think there’s a case to be made for the tool that was used here being cobbled together from a number of different sources.  But the vulnerability that was exploited — the exploit developed by the culpable party here — is the tool, the bad tool.

This soon descends into full-on Sergeant Schultz.

I don’t know what they got and where they got it, but they certainly had a number of things cobbled together in a pretty complicated, intentional tool meant to cause harm that they didn’t entirely create themselves.

MalwareTech took a risk doing what he always does [er, did, before the US government kidnapped him] with malware?

Then there’s weird bit — one of those Bossert moments (like when he said WannaCry was spread by phishing) that makes me think he doesn’t know what he’s talking about. When asked if this North Korean attribution changed the government’s intent to prosecute MalwareTech (Marcus Hutchins), Bossert dodged that tricksy question (the answer is, yes, the prosecution is still on track to go to trial next year) but then claimed that Hutchins “took a risk” doing something he has repeatedly said he always does when responding to malware.

I can’t comment on the ongoing criminal prosecution or judicial proceedings there.  But I will note that, to some degree, we got lucky.  In a lot of ways, in the United States we were well-prepared.  So it wasn’t luck — it was preparation, it was partnership with private companies, and so forth.  But we also had a programmer that was sophisticated, that noticed a glitch in the malware, a kill-switch, and then acted to kill it.  He took a risk, it worked, and it caused a lot of benefit.  So we’ll give him that.  Next time, we’re not going to get so lucky.

After dodging the issue of why the government is prosecuting the guy whose “luck” Bossert acknowledges saved the world, he has the gall to say — in the very next breath!! — we need to do the kind of information sharing that Hutchins’ prosecution disincents.

So what we’re calling on here today is an increased partnership, an increased rapidity in routine speed of sharing information so that we can prevent patient zero from being patient 150.

Whatever you do, don’t follow the lack of money

All that was bad enough. But then things really went off the rail when a journalist asked about what one of the poorest countries on earth — a country with a severe exchangeable currency shortage — did with the money obtained in this ransomware attack.

Q    Tom, the purpose of ransomware is to raise money.  So do you have a sense now of exactly how much money the North Koreans raised as a result of this?  And do you have any idea what they did with the money?  Did it go to fund the nuclear program?  Did it go just to the regime for its own benefit?  Or where did that money go?

MR. BOSSERT:  Yeah, it’s interesting.  There’s two conundrums here.  First, we don’t really know how much money they raised, but they didn’t seem to architect it in the way that a smart ransomware architect would do.  They didn’t want to get a lot of money out of this.  If they did, they would have opened computers if you paid.  Once word got out that paying didn’t unlock your computer, the payment stopped.

And so I think that, in this case, this was a reckless attack and it was meant to cause havoc and destruction.  The money was an ancillary side benefit.  I don’t think they got a lot of it.

Wow. A couple things here. First, of one of the poorest countries in the world, Bossert said with a straight face: “They didn’t want to get a lot of money out of this.”

He has to do that, because he has just said that, “They’ve got some smart programmers.” So he has to treat the attack, as implemented, as the attack that the perpetrators wanted. That apparently doesn’t mean he feels bound to offer some explanation for why North Korea would forgo the money that their smart programmers could have earned. Because he never offers that, without which you have zero credible attribution.

Still nuttier, at one level it cannot be true that “we don’t know how much money they raised.” Later in his presser he claims, “cryptocurrency might be difficult to track” and suggests the government only learned about how little they were making because, “targets seem to have reported to us, by and large, that they mostly didn’t pay. … So we were able to track the behavior of the targets in that case.”

Um. No. It was very public! We watched WannaCry’s perps collect $144,000 via the @Actual_ransom account, and we watched the account be cashed out in the immediate wake of the aforementioned MalwareTech arrest (as Hutchins noted, making it look like he had absconded with his Bitcoin rather than gotten arrested by the FBI).  That, too, is a detail that Bossert would have needed to address for this to be a marginally credible press conference.

But wait! There’s more! We also know that as soon as WannaCry’s perps publicly cashed out, Shapeshift blacklisted all its known accounts, making it impossible for WannaCry to launder the money, and adding still more transparency to the process. Which means Bossert should know well the answer to the question “how much did North Korea (or whatever perp) make off this?” is, zero. None. Because their money got cut off in the laundering process. (For some reason, Bossert gave Shapeshift zero credit here, which raises further questions I might return to at a later date.) Either attribution includes details about this process or … it’s not credible.

Bossert’s backflips to pretend Trump isn’t treating North Korea differently than Russia

Now, all this is before you get into the gymnastics Bossert performed to pretend that Trump isn’t treating North Korea — against whom this attribution will serve as justification for war — differently than Russia. After being asked about it, Bossert claimed,

President Trump not only continued the national emergency for cybersecurity, but he did so himself and sanctioned the Russians involved in the hacks of last year.

His effort to conflate last year’s hack-related sanctions with the sanctions imposed by Congress but not fully implemented looked really pathetic.

Q    Have all the sanctions been implemented?

MR. BOSSERT:  This was — yeah, this was the Continuation of the National Emergency with Respect to Significant Malicious Cyber-Enabled Activities.  President Trump continued that national emergency, pursuant to the International Emergency Economic Powers Act, to deal with the “unusual and extraordinary threat to the national security, foreign policy, and economy of the United States.”

Pivoting to one of the most important private companies

Immediately after which, perhaps in an act of desperation, Bossert pivoted to Kaspersky, one of the most important security firms in unpacking WannaCry and therefore utterly central to any claim the answer to cyberattacks is to share between the private and public sector. Bossert said this to defend the claim that the Trump administration is taking Russian threats seriously.

Now, look, in addition, if that’s not making people comfortable, this year we acted to remove Kaspersky from all of our federal networks.  We did so because having a company that can report back information to the Russian government constituted a risk unacceptable to our federal networks.

And then — in the same press conference where Bossert hailed cooperation, including with private security firms like Kaspersky, he boasted about how “in the spirit of cooperation” the US has gotten “providers, sellers, retail stores” to ban one of the firms that was critical in analyzing and minimizing the WannaCry impact.

In the spirit of cooperation, which is the second pillar of our strategy — accountability being one, cooperation being the second — we’ve had providers, sellers, retail stores follow suit.  And we’ve had other private companies and other foreign governments also follow suit with that action.

In case you’re counting, he has boasted about cooperation in the same breath as speaking of both MalwareTech and Kaspersky.

Whatever. From this we’re supposed to conclude we should go to war against North Korea and their non-NK keyboarders the world over and  that the way to defend ourselves against them is to simultaneously demand “cooperation” even while treating two of the most important entities who minimized the threat of WannaCry as outlaws.

“Hype:” How FBI Decided Searching 702 Content Was the Least Intrusive Means

/1 Comment/in /by

Former FBI Special Agent Asha Rangappa has a defense of back door searches at Just Security that (unlike most defenses of 702) actually takes on those searches as practiced in most problematic way at FBI, rather than as done in much more controlled fashion at NSA.

FBI does federated searches

I think she nitpicks a few issues. For example, she claims that back door opponents claim there is a “stand-alone computer in the middle of each FBI office with a big sign that reads ‘702 DATABASE ‘” but then goes on to claim “FBI uses one database for all of its investigative functions,” even while admitting that the FBI really does “federated queries” of multiple repositories. The distinction — particularly given that we know the database comes with access limits tied to job function — could offer solutions to concerns about 702 data (including providing access to just metadata, a proposal I’m not a fan of but one she attacks in the post). She also ignores the FBI’s use of “ad hoc databases” that have posed access and data protection concerns in the past.  Which is to say, the technical realities of how FBI Agents access this data soup are more complex than she lays out, and those complexities should be part of the discussion because they present additional risks and opportunities.

FBI’s raw data will be US-person focused

Rangappa minimizes what percentage of raw data obtained by FBI would include US person contact.

According to FBI Director Christopher Wray, the FBI receives about 4.3 percent of the NSA’s total collection – and since not every incidental communication will necessarily involve an USPER, the number of communications involving Americans are likely less than that.

While the FBI does have global investigations, the FBI is going to have few full investigations that have no domestic component. Investigations focused on US victims (say a US company hacked by Russian or Chinese state actors) won’t include many US interlocutors, but the other most likely 702 related investigations would all be focused on international communications: who suspected extremists were talking to in the US, what Iranians were buying dual use or other proliferation products, including from US companies, which Americans that Chinese scientists or Russian businessmen were engaging with closely. The 5,000 or so targets sucked into FBI would be the 5,000 targets in most frequent contact with Americans, by design. That has been the entire justification for this collection program since its inception as Stellar Wind.

And — as Ron Wyden recently made clear — it is permissible to target a foreigner if collecting on a US person is one purpose of the targeting, so long as the foreigner is targetable in his own right. Indeed, we can probably point to examples where that happened. That’s going to increase the US content pulled in with those 5,000 targets.

702 can target a whole bunch of selectors

And I believe this is misleading.

PRISM allows the NSA to target non-U.S. persons reasonably believed to be located abroad based on “selectors” – like an email address or a phone number (but not keywords or names) – which will reasonably return foreign intelligence information.

It is true that upstream collection doesn’t use keywords (and has halted about collection altogether). It is true that the most common selector provided in a directive to Google will be an email address. But there are a slew of other kinds of selectors that NSA and FBI can target. That includes IP addresses, which given the 2014 exception means entirely domestic communications can be collected. Even ignoring the targeting of IP addresses that Americans are known to also use (which will come into FBI’s possession a different way), the collection on chat room IPs, just as one example, might suck up a lot more US person content than individual emails might. And the FBI can also search for things like cookies or encryption tools, which will pull in different kinds of content.

FBI’s queries are not all routinely audited

I think Rangappa overstates the tracking of queries and makes an outright error when she claims that backdoor searches are “routinely audited.”

Every query, furthermore, is documented and placed in a case file. (If we learned anything from James Comey, it’s that the FBI puts everything down on paper.) In fact, every query conducted by the FBI is recorded and must be traceable back to an authorized purpose and a case file.  Agent queries are routinely audited, and a failure of an agent to provide an authorized purpose for conducting a query can be grounds for sanctions, suspension, or even termination.

She overstates the tracking of queries because by design there’s not a case file for many of the queries in question, because they’re done at the assessment stage. Moreover, if the FBI tracked its queries as well as Rangappa claims, it could provide documentation of what was going on to oversight bodies, but it has persistently claimed it could not do so, not in public, and not even in private.

More importantly, the FBI’s use of 702 is simply not audited adequately. That’s true, in part, because in 2012-2013, FBI moved much of its FISA activity to field offices, and not every field office gets audited every six months.

During this reporting period, however, FBI transitioned much of its dissemination from FBI Headquarters to FBI field offices. NSD is conducting oversight reviews of FBI field offices use of these disseminations, but because every field office is not reviewed every six months, NSD no longer has comprehensive numbers on the number of disseminations of United States person information made by FBI.

In 2015 — the most recent period for which we’ve gotten a Semiannual Report — NSD only reviewed minimization at 15 field offices (and ODNI did not attend all of these).

During these field office reviews, NSD also audits a sample of FBI personnel queries in systems that contain unminimized Section 702 collection. As detailed in the attachments to the Attorney General’s Section 707 Report, NSD conducted minimization reviews at 15 FBI field offices during this reporting period and reviewed cases involving Section 702-tasked facilities.

FBI has 56 field offices. And while I’m confident that NSD focuses its 702 reviews on the offices that work with FISA most often — places like DC, NY, LA, SF, and places with significant foreign population, like Detroit and Minneapolis — that means that when a field office that doesn’t use FISA often (say, if an Agent in Milwaukee were researching a hacker named MalwareTech), a combination of inexperience and lax oversight might be especially likely to result in problems.  And note, in any office, just a sample of queries gets reviewed, as the government explained to FISC last year, and the tracking isn’t detailed enough to figure out what occurred with a query without talking to the Agent who did it.

Additionally, NSD conducts minimization reviews in multiple FBI field offices each year. As part of these minimization reviews, NSD and FBI National Security Law Branch have emphasized the above requirements and processes during field office training. Further, during the minimization reviews, NSD audits a sample of queries performed by FBI personnel in the databases storing raw FISA-acquired information, including raw section 702-acquired information. Since December 2015, NSD has reviewed these queries to determine if any such queries were conducted solely for the purpose of retaining evidence of a crime. If such a query was conducted, NSD would seek additional information from the relevant FBI personnel as to whether FBI personnel received and reviewed section 702-acquired information of or concerning a U.S. person in response to such a query.

Notably, the one case where FBI reported a criminal return on a criminal search in 702 information only got reported after NSD did follow-up questioning. So yeah, NSD spends 4 days at Main Justice reviewing this stuff and goes to 27% of the field offices every six months, but that’s a far cry from “routinely auditing” queries.

The importance of investigative levels

The most remarkable thing about Rangappa’s post, however, is how well she exhibits the absurdity of what really goes on here. She correctly states — as I reported here — that FBI only obtains 702 content in full investigations. And she provides a short description of FBI’s three investigative levels.

Specifically, the NSA passes on to the FBI information collected on selectors associated with “Full Investigations” opened by the FBI. Full Investigations are the most serious class of investigations within the Bureau, and require the most stringent predicate to open: There must be an “articulable factual basis” that a federal crime has occurred or is occurring or a threat to national security exists.  (Two other investigative classifications, Preliminary Investigations and Threat Assessments, have lower thresholds to open and shorter time limits to remain open.)

She helpfully describes how investigations work through stages, with new investigative methods approved for each

Querying DIVS is, quite literally, the first and most basic thing the FBI does in its investigative sequence. Depending on the kind of information the search returns, an agent will then take the next prescribed step as outlined in the FBI’s Domestic and Investigative Operations Guide (DIOG) until a case is either opened for further investigation, or the matter is resolved in the negative and closed.

She then dismisses the concern that FBI does queries of 702 data at the assessment level without really addressing it.

Much of the criticism of the FBI’s use of 702 centers around the fact that agents can query subjects in their databases even if there is no evidence of criminal wrongdoing. However, as any law enforcement official will tell you, criminals and spies don’t show up on the doorstep of law enforcement with all of their evidence and motives neatly tied up in a bow. Cases begin with leads, tips, or new information obtained in the course of other cases. Often, the discrete pieces of information the FBI receives may not in and of themselves constitute criminal acts – and the identifying information provided to the FBI may be incomplete. However, anytime the FBI receives a credible piece of information that could indicate a potential violation of the law or a threat to national security, it has a legal duty determine whether a basis for further investigation exists. It is for this reason that a query of its existing databases is essential before proceeding further.

Somehow, the necessity of investigating a tip requires not an assessment of the lead itself, but querying a vast data store to see if the lead connects to any other known evidence even if that evidence is not itself evidence of criminal behavior. (One of the reasons FBI does that — which I’ve written about elsewhere — is to make it easier to find informants.)

That logic — which absolutely reflects the logic under which FBI operates — is all the more bizarre given the fact that the FBI is obliged, under the same DIOG Rangappa cites as the basis for the step-by-step development of an FBI case, to always consider using the “least intrusive” means as laid out by this language in the Attorney General Guidelines.

The conduct of investigations and other activities authorized by these Guidelines may present choices between the use of different investigative methods that are each operationally sound and effective, but that are more or less intrusive, considering such factors as the effect on the privacy and civil liberties of individuals and potential damage to reputation. The least intrusive method feasible is to be used in such situations.

DIOG section 4.4, which lays out what least intrusive means, says that “wiretaps … are very intrusive.” It says that “collecting information regarding an isolated event, such as a certain phone number called … is less intrusive or invasive of an individual’s privacy than collecting a complete communications … profile.” It states that, “If, for example, the threat is remote, the individual’s involvement is speculative, and the probability of obtaining probative information is low, intrusive methods may not be justified, and, in fact, may do more harm than good.”

Ultimately, though, the DIOG swallows all these rules by stating that, “FBI employees may use any lawful method allowed, even if intrusive, where the intrusiveness is warranted by the threat to the national security.” The logic must be — probably not born out even by FBI’s limitation to obtaining raw 702 data tied to Full Investigations — that for any person tied to a Full Investigation, any possible tie to an American about whom someone has submitted a tip, national security overrides all FBI’s rules about least intrusive methods.

But nonetheless, the FBI’s own guidelines admit how intrusive it is to start an investigation by looking at entire conversations rather than simply seeing the record of a email sent. That is, however, what the routine practice is.

Let MalwareTech Surf! Status Report

/5 Comments/in /by

There were several developments in the MalwareTech case late last week.

On Friday, there was a status hearing in his case. Before the hearing, the government submitted a status report revealing that they only provided the malware at issue in the case to Hutchins on October 2, two months after arresting him (the judge approved a protection order on August 21). The government provided five malware samples.

The most recent production was made on October 2, 2017, and contained five malware samples, among other things.

There was also a status hearing Friday. In it, the government revealed they have yet to turn over chat logs from an Internet forum — Hutchins will get that next week.

Govt. notes that there is one more disk to be produced – chats from internet forum on disk to be received from FBI next week.

These may be the ones where, the government claims, Hutchins discussed getting paid for the Kronos malware update. If so, it’s another key piece of potentially rebuttable evidence they’ve taken their time handing over to Hutchins.

The government also has discovery from some foreign country that it is not sure it’ll be able to obtain. This is really sketchy. First, as I’ve mentioned, there are no known US victims of this malware. The victims are in other countries. Is this victim related information? Is it information the government otherwise obtained under EO 12333 that it needs to parallel construct to introduce in this case? Is this from Hutchins’ own government?

There is still an amount of discovery from another country. It is unknown whether it can be obtained by the government. Any information obtained by the govt. will be given to the defense.

In any case, why is the government only now trying to get this evidence? They’ve had two months since the arrest, and three since his indictment.

Finally, an interesting piece of good news. The defense declined to commit to a briefing schedule for fear the government might file a superseding indictment. Given the allegations that Hutchins was involved in other stuff, I had feared the government might indict him on those crimes to further pressure him to plea. But in Friday’s hearing they said if they do file a superseding indictment, it’ll be based on the discovery they’ve already provided to Hutchins, meaning it’ll presumably be on the same alleged malware crime and not any unrelated charges.

The defense notes that it does have concerns regarding the possible filing of a Superseding Indictment and whether there will be more discovery in connection with it. The government has given no details as to the possible filing.

The govt. notes that, if it decides to file a Superseding Indictment, it will relate to discovery already produced or to be produced shortly.

Finally, Hutchins’ lawyers are using the earlier promises the judge made and the malfunction of Hutchins’ GPS tracker in a bid alter the conditions of bail to let Hutchins surf.

During Hutchins’ first hearing in Wisconsin, the judge suggested that after Hutchins had shown a period of compliance, pretrial services could consider lifting his GPS monitoring.

And it will be up to them to decide if — the time at which he’s been sufficiently compliant that they can — they feel comfortable lifting the GPS monitoring, but that will be up to them.

Hutchins’ lawyers reminded the judge of that, even while they provided proof that Hutchins would remain compliant without a curfew or GPS monitoring: Apparently, on a recent trip to the East Coast, his curfew was suspended and his GPS monitor failed, yet he didn’t flee.

Hutchins has continued to comply with his conditions of release, and he traveled to a major city on the East Coast for a few days in September. So that he could catch his early-morning flights, Pretrial Services and the government agreed, with this Court’s approval, that his curfew could be suspended for the duration of his travel. During that trip—through no fault of his own—Mr. Hutchins’ GPS unit refused to take a battery charge and as a result became non-functional. Pretrial Services was alerted to this issue. Mr. Hutchins, of course, did not attempt to flee the country when the GPS unit failed. He simply abided by the rest of his release conditions while on the trip and returned home to Los Angeles as scheduled, where he was fitted with a working GPS unit.

Hutchins’ lawyers argue that the GPS monitor is inconvenient both because it requires two hours each day to charge but also because CA’s GPS monitors can’t be brought on planes, so pretrial services has to swap out the CA GPS monitor for a Milwaukee one any time Hutchins needs to fly.

But the real inconvenience, they admit in a footnote, is that Hutchins lives close to glorious CA beaches but can’t swim or surf.

The GPS unit also cannot be submerged in water. This is relevant because Mr. Hutchins is an avid swimmer and surfer. Engaging in these activities would help him maintain a healthy lifestyle and manage the tremendous stress of his difficult situation.

Given the details on discovery released Friday, my suspicion is the government made this a complex case so they could stall on discovery. If they’re going to do that, by all means Hutchins should be able to enjoy his time in CA.

Update: The government has objected to this request, arguing (ignoring the trip to the East Coast) that there’s no new reason Hutchins is requesting this.

Update: Judge Duffin says Hutchins can surf! There’s a detail in the opinion the government may make hay about, but for the moment, Hutchins is off his GPS and curfew. If he doesn’t watch out he’s going to end up staying in LA forever, once he ditches this charge.

EO 12333 Sharing Will Likely Expose Security Researchers Even More Via Back Door Searches

/6 Comments/in , /by

At Motherboard, I have piece arguing that the best way to try to understand the Marcus Hutchins (MalwareTech) case is not from what we see in his indictment for authoring code that appears in a piece of Kronos malware sold in 2015. Instead, we should consider why Hutchins would look different to the FBI in 2016 (when the government didn’t arrest him while he was in Las Vegas) and 2017 (when they did). In 2016, he’d look like a bit player in a minor dark market purchase made in 2015. In 2017, he might look like a guy who had his finger on the WannaCry malware, but also whose purported product, Kronos, had been incorporated into a really powerful bot he had long closely tracked, Kelihos.

Hutchins’ name shows up in chats obtained in an investigation in some other district. Just one alias for Hutchins—his widely known “MalwareTech”—is mentioned in the indictment. None of the four or more aliases Hutchins may have used, mostly while still a minor, was included in the indictment, as those aliases likely would have been if the case in chief relied upon evidence under that alias.

Presuming the government’s collection of both sets of chat logs predates the WannaCry outbreak, if the FBI searched on Hutchins after he sinkholed the ransomware, both sets of chat logs would come up. Indeed, so would any other chat logs or—for example—email communications collected under Section 702 from providers like Yahoo, Google, and Apple, business records from which are included in the discovery to be provided in Hutchins’ case in FBI’s possession at that time. Indeed, such data would come up even if they showed no evidence of guilt on the part of Hutchins, but which might interest or alarm FBI investigators.

There is another known investigation that might elicit real concern (or interest) at the FBI if Hutchins’s name showed up in its internal Google search: the investigation into the Kelihos botnet, for which the government obtained a Rule 41 hacking warrant in Alaska on April 10 and announced the indictment of Russian Pyotr Levashov in Connecticut on April 21. Eleven lines describing the investigation in the affidavit for the hacking warrant remain redacted. In both its announcement of his arrest and in the complaint against Levashov for operating the Kelihos botnet, the government describes the Kelihos botnet loading “a malicious Word document designed to infect the computer with the Kronos banking Trojan.”

Hutchins has tracked the Kelihos botnet for years—he even attributes his job to that effort. Before his arrest and for a period that extended after Levashov’s arrest, Hutchins ran a Kelihos tracker, though it has gone dead since his arrest. In other words, the government believes a later version of the malware it accuses Hutchins of having a hand in writing was, up until the months before the WannaCry outbreak—being deployed by a botnet he closely tracked.

There are a number of other online discussions Hutchins might have participated in that would come up in an FBI search (again, even putting aside more dated activity from when he was a teenager). Notably, the attack on two separate fundraisers for his legal defense by credit card fraudsters suggests that corner of the criminal world doesn’t want Hutchins to mount an aggressive defense.

All of which is to say that the FBI is seeing a picture of Hutchins that is vastly different than the public is seeing from either just the indictment and known facts about Kronos, or even open source investigations into Hutchins’ past activity online.

To understand why Hutchins was arrested in 2017 but not in 2016, I argue, you need to understand what a back door search conducted on him in May would look like in connection with the WannaCry malware, not what the Kronos malware looks like as a risk to the US (it’s not a big one).

I also note, however, that in addition to the things FBI admitted they searched on during their FBI Google searches — Customs and Border Protection data, foreign intelligence reports, FBI’s own case files, and FISA data (both traditional and 702) — there’s something new in that pot: data collected under EO 12333 shared under January’s new sharing procedures.

That data is likely to expose a lot more security researchers for behavior that looks incriminating. That’s because FBI is almost certainly prioritizing asking NSA to share criminal hacker forums — where security researchers may interact with people they’re trying to defend against in ways that can look suspicious if reviewed out of context. That’s true, first of all, because many of those forums (and other dark web sites) are overseas, and so are more accessible to NSA collection. The crimes those forums facilitate definitely impact US victims. But criminal hacking data — as distinct from hacking data tied to a group that the government has argued is sponsored by a nation-state — is also less available via Section 702 collection, which as far as we know still limits cybersecurity collection to the Foreign Government certificate.

If I were the FBI I would have used the new rules to obtain vast swaths of data sitting in NSA’s coffers to facilitate cybersecurity investigations.

So among the NSA-collected data we should expect FBI newly obtained in raw form in January is that from criminal hacking forums. Indeed, new dark web collection may have facilitated FBI’s rather impressive global bust of several dark web marketing sites this year. (The sharing also means FBI will no longer have to go the same lengths to launder such data it obtains targeting kiddie porn, which it appears to have done in the PlayPen case.)

As I think is clear, such data will be invaluable for FBI as it continues to fight online crime that operates internationally. But because back door searches happen out of context, at a time when the FBI may not really understand what it is looking at, it also risks exposing security researchers in new ways to FBI’s scrutiny.

 

MalwareTech’s Case Gets Complex

/15 Comments/in /by

Today, prosecutor Michael Chmelar and Marcus Hutchins’ lawyers, Marcia Hofmann and Brian Klein, had a phone meeting with judge Nancy Johnson.

Hutchins’ lawyers got the judge to agree to further loosen his bail terms (putting him on a curfew rather than house arrest, it appears). But, after agreeing willingly to most requests last week, the government is now objecting to the change, asking for a stay and reconsideration. Recall, too, that AUSA Michael Chmelar had tacitly agreed to have Hutchins taken off GPS monitoring. We will likely see the substance of their complaint in a motion in the coming days.

The other thing that happened — again, as I reported would happen here — the case got deemed complex, meaning the trial can be delayed without a violation of the Speedy Trial Act. The minutes describe the judge’s approval of the motion for these reasons.

Based on the information presented here, the nature of the charges, the nature and amount of the discovery, the fact that discovery is coming from multiple sources and the fact that some of the information may need independent testing/review, the court will designate this matter COMPLEX.

The most interesting detail here is that independent testing may be required. Probably — especially given researchers are already raising doubts — Hutchins’ lawyers are going to get outside experts to check the government claims that the code sold in Kronos came from Hutchins.

Another detail from the minutes is that Hutchins’ lawyers object to the redaction of the indictment.

The Government gives background of this case and notes that defendant Hutchins is the only party to appear thus far.

[snip]

The defense notes that it objects to the redaction of the Indictment.

The WI courthouse already accidentally revealed the name of Hutchins’ co-defendant, Tran.

In spite of some effort, no one I’ve seen has identified a likely (and sufficiently interesting) co-defendant whose last name is Tran — or a connection between that name and VinnyK, the name currently associated with selling the malware. Presumably, if the co-defendant’s aliases were unsealed, it would be easier for researchers to understand what Hutchins has been accused of, and who he has been accused of conspiring with.

As for the discovery, some of that was provided in the minutes. As I noted, the government turned over Hutchins’ custodial interview (curiously, the minutes don’t specify that they were with the FBI) and the recordings of two calls.

 The government will be following its open file policy. To date, the defendant has provided the defense with the following:

– 1 CD with post arrest statements

– CD with 2 audio recordings from the county jail in Nevada. (The government is awaiting a written transcript from the FBI.)

Here’s what’s left to discovery, with my comments interspersed.

In addition, there are:

– 150 pages of Jabber chats between the defendant and an individual (somewhat redacted).

Were these encrypted or group chats? If the former, via what means did FBI decrypt them? Did someone hand them over to the FBI?

– Business records from Apple, Google and Yahoo.

These would be accessible via Section 702 (though, given the lack of a FISA notice, would likely have been backstopped via subpoena if they were collected via 702).

– Statements (350 pages) to the defendant from another internet forum which were seized by the government in another District.

The government provides no details on what the location (US or overseas) of this forum is — and they describe it as statements to Hutchins rather than statements by him. But their existence shows that another District had enough interest in some conversations Hutchins happened to be involved in that they collected — via whatever means — this forum.

– 3-4 samples of malware

At a minimum, the government needs 3 pieces of malware: Kronos before Hutchins allegedly updated it, Kronos after he did, and the version of Kronos that got sold. Apparently, the government hasn’t decided how many versions they’ll give the defense. And all that still leaves the question of victims; to prove that anything Hutchins did affected any Americans they might need more malware.

In part for that reason, I suspect independent researchers will continue to look for their own publicly available samples.

– A search warrant executed on a third party which may contain some privileged information.

As with the other forum, this suggests the FBI or some other agency was interested enough in another case — or a corporation — such that some kind of privilege might apply. This could, in fact, be a victim.

All of that is what led the defense to request (after the government already said it would do the same, having initially said this wouldn’t be a complex case) that this should be deemed complex, in part so Hutchins’ team can have a couple of months to review what they’re looking at.

The parties agree that the case should be designated as complex. Information is still being obtained from multiple sources. The issues are complex[.] The defendant requests 45-60 days in which to review the discovery. The government notes that it is in agreement with the request.

So it’s a complex case and it’ll drag on until such time as the government gets more coercive to get whatever it is they’re after or they drop the case.

Government Aims to Protect Other Ongoing Investigations in MalwareTech Case

/3 Comments/in , /by

In its request for a protection order governing discovery materials turned over to the defense in the Marcus Hutchins/MalwareTech case, the government provided this explanation of things it needed to keep secret.

The discovery in this matter may include information related to other ongoing investigations, malware, and investigative techniques employed by the United States during its investigation of Mr. Hutchins and others.

The government will always aim to protect investigative techniques — though in an international case investigating hackers, those techniques might well be rather interesting. Of particular interest, the government wants to hide techniques it may have used against Hutchins … and against others.

The government’s claim it needs to hide information on malware will disadvantage researchers who are analyzing the Kronos malware in an attempt to understand whether any code Hutchins created could be deemed to be original and necessary to the tool. For example, Polish researcher hasherezade showed that the hooking code Hutchins complained had been misappropriated from him in 2015, when the government claims he was helping his co-defendant revise Kronos, was not actually original to him.

The interesting thing about this part of Kronos is its similarity with a hooking engine described by MalwareTech on his blog in January 2015. Later, he complained in his tweet, that cybercriminals stolen and adopted his code. Looking at the hooking engine of Kronos we can see a big overlap, that made us suspect that this part of Kronos could be indeed based on his ideas. However, it turned out that this technique was described much earlier (i.e. here, //thanks to  @xorsthings for the link ), and both authors learned it from other sources rather than inventing it.

Hasherezade may well have proven a key part of the government’s argument wrong here. Or she may be missing some other piece of code the government claims comes from Hutchins. By hiding any discussions about what code the government is actually looking at, though, it prevents the security community from definitely undermining the claims of the government, at least before trial.

Finally, there’s the reference to other, ongoing investigations.

One investigation of interest might be the Kelihos botnet. In the April complaint against Pyotr Levashov, the government claimed that the Kelihos botnet had infected victims with Kronos malware.

In addition to using Kelihos to distribute spam, the Defendant also profits by using Kelihos to directly install malware on victim computers. During FBI testing, Kelihos was observed installing ransomware onto a test machine, as well as “Vawtrak” banking Trojan (used to steal login credentials used at financial institutions), and a malicious Word document designed to infect the computer with the Kronos banking Trojan.

Unlike known uses of Kronos by itself, Kelihos is something that has victimized people in the United States; the government has indicted and is trying to extradite Pyotr Levashov in that case. So that may be one investigation the government is trying to protect.

It’s also possible that, in an effort to pressure Hutchins to take a plea deal, the government is investigating allegations he engaged in other criminal activity, activity that would more directly implicate him in criminal hacking. There’s little (aside from statutes of limitation) to prevent the government from doing that, and their decision to newly declare the case complex may suggest they’re threatening more damaging superseding indictments against Hutchins, if they can substantiate those allegations, to pressure him to take a plea deal.

Finally, there’s WannaCry. As I noted, while the government lifted some of the more onerous bail conditions on Hutchins, they added the restriction that he not touch the WannaCry sinkhole he set up in May. The reference to ongoing investigations may suggest the government will be discussing aspects of that investigation with Hutchins’ defense team, but wants to hide those details from the public.

Update: I’ve corrected the language regarding Kelihos to note that this doesn’t involve shared code. h/t ee for finding the reference.

Marcus Hutchins, the Word of God

/2 Comments/in /by

Motherboard obtained the hearing transcript from Marcus Hutchins (AKA MalwareTech) court hearing on August 4. It reveals precisely the oblique language Prosecutor Dan Cowhig actually used, which got reported very differently, to explain Hutchins’ alleged admission to have authored the Kronos malware.

In his interview following his arrest, Mr. Hutchins admitted that he was the author of the code that became the Kronos malware and admitted that he had sold that code to another.

Compare that to this allegation, in Hutchins’ indictment.

It’s a very different thing to create code that may make up part of a package that would be sold on AlphaBay as malware and to write code that makes up part of the code ultimately packaged and sold as malware. It seems likely the government overstated what they had evidence of in the indictment (and, one wonders, to the grand jury), which might, in turn, significantly alter questions of intent.

Even with the government’s claim that Hutchins discussed getting paid for his code in chat logs (we’ll see about their provenance and accuracy after Hutchins goes broke trying to pay the bills in WI without a job, I guess), it’s not entirely clear the government even claims to have evidence that Hutchins wanted to sell a tool to rip off banks.

Which means that any eventual trial (assuming Hutchins doesn’t plea out of desperation) may turn on textual analysis of what it was some agents in WI bought off the dark web and what Hutchins coded years ago.